DAVOS, Switzerland (Reuters) - The top executive was on a roll -- Barack Obama didn't know what he was doing, he didn't understand business, he didn't realize knee-jerk pronouncements could destroy jobs.

It was a private, five-minute, expletive-filled tirade against the president for this reporter's benefit. Welcome to one aspect of the World Economic Forum's annual schmoozefest.

This unique event -- a gathering of several thousand of the members of the world's business and political elites for debate, dealmaking and a fair amount of partying in a ski resort in the Alps -- is in many ways an annual celebration for capitalists.

But this is a very dysfunctional family.

For the second successive year, the recriminations arising from the financial crisis were a dominant theme.

Sure, the global economy looks better - people are no longer talking about financial Armageddon, while some CEOs are talking about investing more, buying companies and even hiring.

But many times when executives talked about a recovery, they also used words like "fragile" and then mumbled about whether the battle between bankers and politicians could upset it all.

The tone for this year's WEF was partially set by Obama's proposal on January 21 to ban financial institutions with commercial banking operations from engaging in proprietary trading operations for their own profit. Coming against the backdrop of sky-high Wall Street compensation, only just over a year after huge government bailouts, it meant bankers' behavior was going to be a major focus.

The release of the annual Edelaman Trust Barometer at Davos didn't help. It showed that college-educated, so-called "opinion leaders" around the world have lost a huge amount of trust in banks. In the United States, for example, the trust level has plummeted to just 29 percent of those surveyed from 68 percent in 2007.

PUBLIC ENEMY NUMBER ONE?

No wonder that Junichi Ujiie, the chairman of Japan's largest brokerage Nomura Holdings Inc, said he perceived bankers were seen in the West as "public enemy No.1."

"When I come to Davos I find a very big difference. Bankers and investment bankers in Tokyo are still respected," he said.

This year more top bankers turned up than last year, when it was too dangerous to risk being seen near a ski slope supping gluhwein and fondue just after being rescued with taxpayer cash.

Some of those who did come this time around kept a low profile -- Citigroup Inc CEO Vikram Pandit and Morgan Stanley Chairman John Mack were rarely seen around the Davos Congress Center, though new Bank of America CEO Brian Moynihan was much more prominent.

A meeting between the CEOs of top financial institutions failed to find common ground over regulatory reform, according to several who attended. A push by Wall Street banks and some major European peers to battle back against politicians' attempts to bring in tougher regulations didn't get the support of some European commercial banks who prefer a more conciliatory tone.

By the Saturday, the bankers and regulators were reduced to using post-it notes and white boards in a joint brainstorming session that was inconclusive.

WORRY FOR BUSINESS

To executives in other sectors, this is concerning. If the banks and political leaders continue to fight then markets and bank lending might take a further hit, crimping the recovery.

Daniel Vasella, the chairman of Swiss drugmaker Novartis AG , said lack of trust in the system remained his big worry and made the risk of a double-dip slump "substantial."

Even some bankers are fast losing patience.

"I think the industry had better wake up before they get the wrath of God on them," said Joseph Perella, a veteran dealmaker and chairman of U.S. investment bank Perella Weinberg Partners.

Of course, there is always a possibility all this huffing and puffing may be a lot less relevant than the evidence of more than just green shoots in parts of the economy.

Luxury hotel chain Starwood Hotels & Resorts Worldwide Inc said during the week it expects to open 80-100 hotels this year and its CEO Frits van Paasschen said at Davos it was benefiting from pent-up demand as companies who canceled their offsite sales meetings last year now reinstate them.

Even the paranoia among executives that they would get accused of organizing junkets at a time of job losses and government rescues has diminished, he said. "People are more discreet but they are not scared," he said.

The heads of top private equity firms, such as Blackstone Group LP, Carlyle Group and Kohlberg Kravis Roberts & Co, also said they were optimistic.

Vivek Ranadive, the CEO of business software firm Tibco Software Inc, said it was time to "quit whining."

But then again perhaps we should just consult the astrologers, like Geneva-based banker and industrialist Prakash Hinduja. When asked at the WEF about the investment climate he had no hesitation in declaring 2012 will be a very bad year in the U.S. and the years heading into it not much better: "The astrology guides us on this," he said.

Hinduja might want to do a little star-gazing for the bankers and regulators too.